(SBMA chair and administrator Amy Eisma gestures as she answers questions from the media. Photo by Ashley Manabat)
CLARK FREEPORT – At least five foreign companies are eyeing Hanjin Heavy Industries and Construction Philippines at the Subic Bay Freeport Zone as white knights after the Korean ship builder declared bankruptcy last January.
Atty. Wilma Eisma, Subic Bay Metropolitan Authority (SBMA) chair and administrator, also said as of Wednesday last week, the five banks which loaned money to Hanjin have signed an agreement and officially formed a consortium.
Eisma said RCBC, BDO, Landbank, BPI and Metrobank officially formed a consortium and signed an agreement that they will work as one with RCBC as their lead negotiator.
Published reports identified the white knights as two American firms, Damen Shipyards Group of Denmark and two more Asian companies backed by their governments.
Eisma made the disclosure at the “Balitaan” media forum organized by the Capampangan in Media, Inc. (CAMI) in cooperation with the Clark Development Corp. (CDC) at the Bale Balita here last Friday.
Eisma said the white knights do not include China because the government have stopped talking to China already.
“Subic is very close to the contested waters with China. I think that was the reason why there was an alarm set off when the Department of Trade and Industry (DTI) and the Board of Investments (BOI) started talking to the Chinese government or Chinese companies because we are just a skip and hop away from the contested waters with China. So that is something that we have to consider,” she explained.
ICTSI
But she said the International Container Services, Inc. (ICTSI) of Enrique Razon has also expressed intention to take over the facilities.
Eisma said the five are looking at shipyard operations while ICTSI wants to convert it into a mixed use because the property of Hanjin is 326 hectares and the combined size of the ports in Manila is close to 220 hectares only.
“So literally the port volume, you can all actually put in Hanjin with a little spare,” she said.
“As far as I know the interest of ICTSI is to look into port operations and some shipyard operations,” she added.
Eisma said the property of Hanjin has so much potential because it has deep ports and beautiful wharfs and piers as compared during the time of the Americans 25 years ago.
“Now with the new technology and with new engineering marvels the one that Hanjin left is really a state-of-the-art facility,” she said.
“We are now in the process of providing a conditional consent to assignment because in theory the property now will have to be turned over to the banks in terms of ownership so that they can negotiate with the white knight and then they will be in the interim helping run the shipyard which has not totally closed down,” she explained.
The consortium has agreed with Hanjin and the Korean Development Bank that they will take over the shipyard and they will be the trustee of the shipyard, she said.
“So, part of the negotiations with a possible white knight is that they will have to deal with the consortium,” she added.
“I am also working very closely with the Secretary of Finance because of the enormity of the transactions not to mention that Landbank, which is a government owned bank, is also chaired by the Secretary of Finance,” she explained.
“So right now, I can confirm that there are really big companies back by stable governments that are negotiating as white knights,” she said.
Eisma recalled that a few years ago Hanjin already experienced a downtrend in their business and to tide them over, they accepted orders for steel structures because they are really into welding.
Canadian firm
Eisma disclosed that another Canadian firm is trying to sound off but has not signed anything so the seriousness of the off er is not being considered.
Do SBMA still collect rentals?
Under the contract of Hanjin, they pay after a number of years, she said. Right now, there is nothing due. But in 2025, there is something due but it is only several millions, she said.
“That is part of our claim. We will not let go of that,” she said.
“We will not give up on it, but I can forfeit on it if they cannot pay. I can forfeit on the property and take back the property. Our claim is higher than that of the banks,” she explained.
Eisma said Hanjin has become a national issue “in a sense because of the employment it generates and again of the security concerns because of our proximity to the contested waters.”
Redondo Peninsula
Eisma said when the contract was signed with Hanjin, Redondo Peninsula was nothing because it does not have water, no power, no roads and it’s almost mountainous.
“I would like to put this one into context because the rates of a property there is different than in Clark because there is nothing there,” she said. “And it can only be reached by ferry,” she added.
Eisma said at the time when Hanjin came in nobody wanted to believe it. In fact, right now, I’m still trying to sell the nearby properties but there are hardly any takers,” she said.
“That is why Hanjin spent close to $2.2 billion just to put up their own power plant, put up their own water system and sewage treatment plant. The development cost of that property is a lot of money that is why they got a very reasonable rate in terms of rent,” she explained.
Hanjin’s peak
Eisma said at the peak of Hanjin in 2015, they have 33,000 workers.
When they declared bankruptcy early this year, the workers were down to 3,000. She said the bare minimum is 380 workers for repair yard since March 1.
Eisma said two weeks ago, some P288 million was approved for release to pay the workers that were left by the retrenchment.
She said there was a “gradual closure” of Hanjin which went into receivership after filing for bankruptcy.
She said Hanjin claimed that it went bankrupt due to the slowdown of business and due to its heavy debt.
Receiver
She identified Rosario Sheryl Bernal, an expert on receivership who used to be with the Department of Finance (DOF), as the court appointed receiver.
The receiver will now make sure it will protect its suppliers and the SBMA, she said.
Hanjin debt amounted to $415 million to its creditor banks. But it was learned that $45 million was already paid to Metrobank before the consortium was formed.
Eisma said Hanjin’s loan from Metrobank is considered a secured loan.
She said Hanjin had six pending orders. “They have a massive operation and they have purchase orders but they cannot go to the banks because the banks refused to lend them money anymore,” she said.
Top of the game
Eisma said at the time Hanjin signed a contract with SBMA, “it was at the top of the game.”
Hanjin is the builder of the biggest container vessel in the world.
In January 2018, Hanjin had completed manufacturing its 115th vessel and the world’s biggest cargo ship from its shipyard at Redondo Peninsula.
The 20,600 twenty-foot-equivalent-unit (TEU) class container vessel, named Antoine De Saint Exupery, is owned by French shipping company CMA CGM.
It is now the world’s largest container ship – 400 meters in length, 1.59 meters in width and 33 meters in depth. It exceeded the capacity and size of the previous world’s largest, the Hong Kong-registered CSCL Globe with 19,000 TEU – 400 meters in length, 58.6 meters in width and 30.5 meters in depth.
It was learned that the mammoth container vessel could transport up to 20,950 units of 40-foot shipping containers, which, when lined up, would reach 12.5 kilometers long, with its deck as big as four football fields.
